China prefers to subsidise round trips on New Silk Road

Image: Russian Railways (RZD)Russian Railways

More and more new routes are being launched on the New Silk Road every year. Not all of them stand the test of time. Those that survive are also in danger as they need to provide enough volumes of freight traffic for the round trip services. This task is very difficult for logistics companies, but very important to obtain Chinese subsidies.

Revenues and subsidies are two sides of the same coin which is known as the New Silk Road. It is not a secret that China is funding the container train connections to Europe. Recent years has seen a shift to a more practical approach to subsidies. According to Wolfgang Rupf, Managing Director of RTSB, much attention is currently given to eastbound services. “China has to subsidise round trips”, he said at the RailFreight Summit that took place from 1-3 September in Poznań. At the same time, the speaker also mentioned that there could be many other factors that impact the final decision on whether to fund or not to fund some train service. “It’s always a little bit difficult”.

In the right place

Meanwhile, the eastbound connections are not enough to establish a reliable container train service on the New Silk Road. It is very important to place a train in the right location from the very beginning. To this end, Rupf gave an example of the corridor via Kaliningrad. RTSB also tested the route from the Mamonovo/Braniewo border crossing between Belarus and Poland. In spite of running four trains per week, the service did not gain popularity among the customers. This is caused by the limited capacity of the route. After Braniewo it goes further to Poland and Germany by the traditional routes from Małaszewicze. As a result, this connection is not to able to provide more capacity for the new services.

RTSB then switched to multimodal connections that include a sea leg. “We proposed to our customers two chartered vessels between Kaliningrad and Hamburg”, the speaker added. This solution was more successful among the shippers as we collect containers from several trains and transport them together by sea. RTSB, in its turn, is planning to add a third vessel on the route. “It is a very long procedure until our customers understand that they may have to choose a different route”, Rupf remarked.

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Author: Mykola Zasiadko

Mykola Zasiadko is editor of online trade magazines and

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